LAST UPDATE | 2 Oct 2022
UK PRIME MINISTER Liz Truss acknowledged mistakes over the mini-budget but said she is standing by her tax-cutting plan as she refused to rule out public spending cuts.
Truss admitted she could have done more to prepare the ground for Chancellor Kwasi Kwarteng’s financial statement, which spooked the markets, sent the pound plummeting, and forced a £65 billion intervention by the Bank of England to restore order.
Truss said the mini-budget’s most controversial measure – the abolition of the 45% tax rate on earnings over £150,000 – was not discussed with the Cabinet but was a decision made by the Chancellor.
She arrived in Birmingham for the start of the annual Conservative Party conference as another opinion poll showed Labour with a big lead over the Tories.
The survey by Opinium, put Labour on 46%, 19 points clear of the Conservatives on 27%. On the issue of the economy it found that a one-point lead for the Tories a week ago had become a 19-point advantage for Labour.
“I do want to say to people I understand their worries about what has happened this week,” she told the BBC’s Sunday With Laura Kuenssberg.
I do stand by the package we announced and I stand by the fact we announced it quickly, because we had to act.
“But I do accept we should have laid the ground better… I have learnt from that and I will make sure that in future we do a better job of laying the ground.”
During the interview, Truss made Kwarteng own the controversial decision, saying it was not discussed with the wider Cabinet.
“No, no, we didn’t. It was a decision the Chancellor made,” she said.
Labour opportunity
With some Tory MPs speculating that she might not last the until the end of the year, Labour leader Keir Starmer sought to seize on the discontent in the Conservative ranks, urging rebels to work with Labour to defeat the Government’s tax plans in the Commons.
Writing in The Daily Telegraph, the Labour leader said it was “unacceptable” that neither the country nor Parliament had had any say on the measures despite the chaos wreaked on the financial markets.
“The economy is not a laboratory experiment for the maddest scientists of the Conservative Party. Mortgages, pensions and family finances are not casino chips for a Government intoxicated by dogma,” he said.
“There are many decent Conservative MPs who know this. My message to them is that Labour will work with anyone to ensure some semblance of economic sanity is restored.”
But in an interview with The Sunday Telegraph, Truss said she was sticking to her guns, and that tax cuts were essential to get the economy growing again.
“Change is always something that people might find worrying. But what I’m fundamentally saying is we do have to change, and the status quo isn’t an option,” she said.
“We cannot continue on the current trajectory of managed decline… We must take a new direction.”
Kwarteng admitted he been taken aback by the reaction of the financial markets to his mini-budget.
He told The Mail on Sunday that it had been put together at “very high speed” because of the need to support people with their energy bills, but that he was “100% convinced” it was the right plan.
“It’s very difficult to actually anticipate how markets react to anything and if politicians were really good at reading markets, I suggest they probably would be market traders,” he said.
“I think what we’re seeing now is more stability and I’m hopeful that we can build on that.”
It comes amid reports of letters going in to the chairman of the backbench Conservative 1922 Committee, Graham Brady, from Tory MPs calling for a vote of no confidence in Truss.
While under current rules she is protected from a leadership challenge for a year from her election, the 1922 executive has the power to change those rules should the demand for a contest become overwhelming.
Meanwhile a number of senior figures – including Truss’s defeated leadership rival Rishi Sunak and former cabinet ministers Priti Patel, Sajid Javid and David Davis – are reportedly staying away from the conference.
South Suffolk MP James Cartlidge became the latest backbencher to criticise the Chancellor’s plans, saying that while change was needed, reducing benefits while cutting taxes for top earners in a cost-of-living crisis was “unacceptable”.
“This does not mean that, having lost market support for proposed unfunded tax measures, we try to win that support anew with on-the-back-foot, un-pitch-rolled cuts to benefits when the cost of food and staples is rocketing, whilst keeping a tax cut for the wealthiest,” he tweeted.
However former foreign secretary Jeremy Hunt, who backed Rishi Sunak for the leadership, said that Truss should be given a fair chance for her plan to work.
“It obviously was a very wobbly week. But we have to let things settle down. And that I think will be the time to make judgments,” he told GB News.
Chancellor concerns
It comes as Kwarteng now faces calls for an official inquiry following media reports that he attended a private champagne reception with hedge fund managers who stood to benefit from a collapse in the pound following his mini-budget.
The Sunday Times reported that he joined the gathering at the Chelsea home of a City financier on the evening of September 23 where he was said to have been “egged on” to commit to his plan for £45 billion of unfunded tax cuts.
Liberal Democrat Treasury spokeswoman Sarah Olney said: “While struggling homeowners saw their mortgage bills spiral, it seems the Chancellor was sipping champagne with hedge fund managers profiting from the falling pound.
“How out of touch can you get? We need an official inquiry into this now.”
However, a source close to Chancellor dismissed any suggestion of impropriety regarding his attendance at the reception.
“Any suggestion attendees had access to privileged information is total nonsense,” the source said.
“The growth plan published on Friday included a commitment to review our tax code to make it simpler, better for families and more pro-growth.
“The Government’s ambitions on lowering the tax burden are hardly a state secret.”
To embed this post, copy the code below on your site
have your say